U.S. manufacturing activity continued its expansion in November, according to the Institute for Supply Management’s Manufacturing Purchasing Managers’ Index. The index registered 57.5 in November, its seventh straight month of expansion, but was 1.8 points below the 59.3 reading in October. A reading above 50 suggests expansion.
November’s reading was slightly below economists’ forecasts of 58, but panel sentiment was optimistic, with 2.5 positive comments for every cautious comment, an improvement compared to October.
The drop in the index was led by declines in the indices for new orders, production and employment, and is consistent with recent data from regional manufacturing surveys, as well as the RSM US Manufacturing Outlook Index, which recently started to show cracks in the optimism of the past few months as the economy decelerates and the pandemic intensifies.
The new orders index registered 65.1, down 2.8 points from the October reading of 67.9. The production index registered 60.8, a decrease of 2.2 points compared to 63 in October. The employment index returned to contraction territory at 48.4, which was 4.8 points down from 53.2 in October, showing the continued challenges on the labor front as organizations reported challenges attracting and retaining employees.
Overall, the message remains that manufacturing activity continues to recover at a solid clip. Demand expanded, with the new orders index growing at strong levels, led by export orders rising at their fastest pace since March 2018. The customers’ inventories index, at its lowest figure since June 2010, is also considered a positive for future production.